And What Did You Do Over The Weekend?
|View From The Ridge: 40|
January 22, 2016
Vice President, Services
On Tuesday night, I returned home from New York where we were exhibiting at the NRF Big Show 2016. The event was well attended and seemed to be a large number of new companies trying to sell a new version of something and using all the right buzzwords.
My first experience at the NRF show was in 1978. In the ensuing 36 years, I have been the show about 30 times. I have attended as a supplier standing in a booth space and as a customer, either wandering around or looking for specific solutions to solve a business problem. I’ve also been to the Big Show as a consultant on my own, representing a client. There is one thing that stands out from all of those trips to New York in the cold, often snowy or rainy, post-Christmas timeframe- And that is, I find it’s confusing trying to identify which of the “me too” suppliers might actually have something meaningful to share that could really help me solve a problem.
Each year I see booths running the full spectrum. There are the occasional behemoths with the 50x50 booths that resemble small houses, and then there are booths like the one next to us this year that consisted of a printed bedsheet as the backdrop and a table behind which sat a bunch of really smart analytics consultants. I have actually known these guys for several years and have worked with them and they are, in fact, really smart. My point is that it is easy to become enamored by the flash, the buzzword compliant messaging and the apparent newness of some of the technology. Towards the end of day one, I spoke with a prospective customer. His comment was that he had spent a couple of hours walking the floor and didn’t see anything new. That is not to say that there was nothing new, just that it appeared to be the same old stuff with newer wrapping.
I think that there are two ways to “tour” the NRF expo hall. One is to predetermine a business problem you are trying to solve and research which companies you should seek out. The other is to explore and query the people or companies you have never seen to hear their spiel about what makes them different or more importantly, what is the business problem they provide a solution to.
There are some amazing companies represented at NRF. Some have a new, imaginative way to look at your business. Some have new tools and technology that allow you to look at things in a way not previously possible. Knowing why you are there really helps to separate the meaningful folks from the snake oil salesmen. This finally brings us to my main point.
Everyone can provide guidance or a solution to improve some aspect of your business performance. The challenge is how do you maintain continuous improvement in your company’s performance? Let’s walk through an example. Suppose you carry an average of $50 million in inventory and you are achieving 10 turns and maintain an estimated service to your customers of 95%. The easy solution and the decision regarding which tool might help is not terribly important…
For example, just about anyone can increase service. The more important thing is what happens after service has improved. Can you improve service without increasing inventory? If the service improvement results in more sales and maintaining the same turns, your inventory will actually go up. If I try to support the increase in service without more inventory to significantly improve turns, perhaps it becomes difficult to maintain a meaningful service improvement. If I add the possibility of non-recurring events and opportunistic buying situations, it becomes even more complex when trying to balance the somewhat foundational elements such as service and turns. And oh by the way- when you consider the drivers of profit margin and profit dollars, it adds an even deeper layer of complexity.
In many business models there are other considerations that must be factored into the performance discussion. How about pricing philosophies, space constraints, debt financed inventory, omni-channel or competitive changes?
In order to optimize your supply chain, you must be sure that both you and your supply chain solution provider understand the complete supply chain. It is not a linear process, it is a complex circle of things. A strategy, followed by tactics, then execution, evaluation, adjustment, strategy reassessment or confirmation, then repeat.
It is very easy to get caught up in either the simple view of only one component, or to become overwhelmed by the complexity. This proved to be true at NRF as I was walking the floor at the show trying to determine who could help the best, quickest, most thoroughly, etc. It is rare that a person or provider truly understands all of the complexities of the supply chain relationships.
Today’s supply chain practitioner needs be an expert in many different aspects of the supply chain. They need to be able to:
- Stand above the fray and see all of the moving parts and the interactions.
- Have a plan.
- Know that plan will ultimately lead.
- Know how you will continuously improve the overall result.
- Find a metric or several that will give an overall picture.
- Score them so that you have a way to assess the interaction of a given service, turn, cash, inventory target toward your overall goal.
Blue Ridge can help with all of this. Our LifeLine team and our business consultants can provide a very thorough review for you. We can help you develop a plan, the metrics and a way to get to the end. You MUST have a plan. Question everything, ask “Why?” at every point. This will help you improve your company’s performance and, by the way, it will help you navigate the NRF show floor or any other convention you may attend.
If you would like to better understand how you can actively use your supply chain to drive your company to continuous improvement, call us. We would enjoy working with you to build a strategy, and figure out how to more actively leverage your SCP system from Blue Ridge to elevate your company to new heights.